For this Field Note, we wanted to share some thoughts on a question we are asked often, especially over the past few years: why we continue to focus on ground-up development instead of simply buying existing properties.
There are periods in every real estate cycle when acquisitions look easier. Buying an existing asset can offer immediate cash flow, less construction risk, and a shorter path to stabilization. At the same time, those advantages are usually reflected in the purchase price, and over long hold periods we have often found that development provides a better opportunity to create value.
Since the founding of our company, our strategy has been built around developing projects in high-growth suburban corridors where population expansion, traffic patterns, and new rooftops support long-term demand. These are often locations where institutional capital is not yet active, but where fundamentals are improving quickly. By entering early, we are typically able to control land at a lower basis and design projects specifically for the market we expect to see over the next ten years, not the last ten.
Development does involve more work and more uncertainty. Construction costs move, interest rates change, and lease-up periods rarely follow a straight line. We experienced all of those challenges during the COVID period, when supply chains, labor availability, and capital markets all shifted at the same time. While those years were not easy, they reinforced a lesson we have seen before — projects that begin during uncertain periods often end up performing well once markets normalize.
Another advantage of building rather than buying is the flexibility it gives us during the hold period. Because we control the land from the beginning, we are often able to add value later through expansions, pad sites, billboard locations, cell tower leases, or other ancillary income that would not be available in a fully built, institutional asset. Over time, these smaller decisions can have a meaningful impact on total returns.
Today, we are starting to see acquisition opportunities improve as higher interest rates and slower transaction volume have reset pricing expectations. We will continue to look at those opportunities when they make sense. That said, we still believe our best results are likely to come from doing what we have done for many years — identifying strong suburban locations early, controlling the land, and building projects that are designed for the growth we believe is coming.
As always, our goal is not to follow the easiest path in any given year, but to stay consistent with the approach that has worked across multiple cycles.
